Abstract: A method and apparatus for processing source code in a language processing system with improved parsing based on prefix analysis. A method in accordance with the present invention includes the steps of identifying a previously-parsed prefix of a source code translation unit; creating a parser in a parser state corresponding to the identified prefix; and parsing a remaining portion of the translation unit after the prefix using the parser in the parser state corresponding to the prefix. In one embodiment of the invention, the step of creating a parser includes retrieving stored level-one subtrees corresponding to the top-level statements in the prefix. The level-one subtrees corresponding to the prefix may be stored in the form of a prefix tree along with the text of the top-level source code statements represented by the prefix and a parser delta indicating the effect of the code statements on the parser state.